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Dollar to make space for other currencies, eventually

By NJ Watson

The US dollar will remain the prime currency for commodity markets for the foreseeable future, but will eventually give way to other currencies, according to Algerian energy minister Chakib Khelil.

The dollar has taken a pounding following a story on 6 October in the UK's Independent newspaper claiming that Mideast Gulf Arab nations have held meetings with China, Russia, Japan and France about replacing the dollar as the prime currency for oil trading with a basket of currencies including the yen, yuan, euro, gold and a new, unified currency planned for nations in the six-member Gulf Cooperation Council.

Khelil echoed comments by Algerian finance minister Karim Djoudi that there is no need to replace the dollar as the currency used for oil trade. "I hope the dollar remains the currency for commodities and remains the reserve currency for a long time to come," said Khelil. However, he added that the dollar would slowly give way to other currencies. "That's going to take a long time and depend on the shift in economic and political power," he told journalists at the WGC yesterday.

Khelil also said he hoped that the bidding in Algeria's next licensing round would open in December; so far, 70 companies have registered an interest and over 40 have visited the data room. In the last licensing round, in December 2008, four foreign energy companies signed deals to explore for oil and gas, but permits for 11 areas attracted no bids. At the time, Khelil blamed the economic crisis for the lack of interest, but the round was the first to be held under a 2006 law that gives the state-owned Sonatrach a minimum 51% share in every exploration contract.

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